|Texas Tech University
|Merger and Acquisitions; Serial Acquirer; Post-merger Performance
|Full text PDF:
I examine serial acquirers’ post-acquisition accounting performance and stock performance. About 88% of U.S. acquisitions between 1980 and 2010 were executed by serial acquirers. As a group, serial acquirers outperform single acquirers in terms of both accounting and stock performance. Serial acquirers’ accounting performance (RNOA) initially increases, but also ultimately decreases as the acquisition series progresses. However, serial acquirers’ post-acquisition stock performance is best for their first acquisition and monotonically decreases in subsequent years, ultimately becoming worse than the post-acquisition performance of single acquirers. Acquisition intensity score (the average number of acquisitions per year over the past 24 months) is significantly negatively associated with future RNOA and stock returns. Few serial acquirers maintain an acquisition series of longer than 4 years, but those who do enjoy the highest overall RNOA and stock returns. My results help explain why firms continue to execute acquisitions even though most are value-destructive: managers may observe the superior performance of long-series acquirers and do not recognize that most acquirers will fail to reach this status.